Unfortunately, the cost can be, too.
Too often, retirement plans don’t take into consideration actual costs of the many risks you face in retirement. Health care is one of those risks.
Many people think that once they sign up for Medicare, all their health care costs will be covered. However, this is not true at all.
According to Fidelity, “If you are like most Americans, health care is expected to be one of your largest expenses in retirement, after housing and transportation costs. But, unlike your parents’ generation, you won’t likely have access to employer, or union, sponsored retiree health benefits. So, health care costs will likely consume a larger portion of your retirement budget—and you need to plan for that.”
In fact, Fidelity estimates that the average couple will need $285,000 in today’s dollars for medical expenses in retirement, excluding long-term care. A whopping 42% of that—$119,700—is for co-pays, coinsurance, and deductibles. Thirty-nine percent, or $111,150, is for premiums for Medicare parts B and D, while the remaining 19% is for prescription medications.
Original Medicare Parts A and B cover limited hospital care and doctor visits, but don’t cover dental, vision care, prescription drugs, premium costs, or deductibles. Typically, Part A is free for most, while Part B is usually $135.50 per person per month for most people in 2019. But, if you decide to add coverage through a Medicare Advantage or other plan, the premiums will be higher. Keep in mind that Medicare premiums are usually deducted from your Social Security check every month, so your choices directly affect your income.
As you age, you may face an increased risk of arthritis, more serious cases of flu or pneumonia, injury from falls, osteoporosis, diabetes, depression, Alzheimer’s disease, and vision, hearing, and dental issues. The top most deadly health conditions for seniors according to the Centers for Disease Control (CDC) are heart disease, cancer, chronic respiratory disease, and stroke.
You will want to make sure that you are seen by your doctor regularly, so you can stay healthy.
Schopenhauer once penned, “Health isn’t everything, but without it, everything else is nothing.”
None of this includes the possible need and costs for long-term care. The Department of Health and Human Services estimates that 70% of retirees may need some form of assistance. Medicare may cover a stay of up to 30 days, but the average person who needs care will need it for around three years.
Long-term care is extremely expensive; the average cost for a semi-private room in a full-time nursing facility was $7,441 per month in 2018 according to Genworth. That’s close to $90,000 per year!
It’s imperative for you to include health care expenses in your retirement plan, especially since people in America today, who’ve made it to age 65, can expect to live another 19 years on average according to the CDC. Longevity exacerbates all the other risks you face in retirement. Make sure you plan accordingly.